WASHINGTON – The Obama administration reversed itself on Monday, announcing that private health plans that provide Medicare benefits will receive a slight increase in government payments next year, rather than the reduction that was proposed earlier.
Congressional Democrats, many facing tough re-election campaigns, recently joined Republicans in asking that the private health plans, known as Medicare Advantage, be spared from payment cuts next year, even though they receive an average of 6 percent, or $8 billion, more this year to cover their enrollees than it would cost under the traditional Medicare program.
The administration had proposed a 2 percent cut in Medicare Advantage payment rates in February under the Affordable Care Act, to help bring the payments more in line with the regular Medicare program.
The reduced payments would cause some plans to reduce benefits, but they would still have to provide all the benefits covered by traditional Medicare.
A February report from Barclay’s projects that advantage plans “have ample room to adjust benefits downward while maintaining benefit levels that are better for their members than the traditional (Medicare) fee for service program.”
But a series of attack ads by the insurance industry and Republican-backed groups claimed that the Medicare Advantage cuts would reduce benefits for seniors, cause premiums to increase and force some plans to pull out of certain markets altogether, making access to coverage more difficult.
The ads helped Republican David Jolly narrowly defeat Democrat Alex Sink in a House race in the Tampa, Fla., area last month that was largely viewed as an early test of how health care could affect the November mid-term elections.
Senate Democrats, including Al Franken of Minnesota and Chuck Schumer of New York, joined House Democrats like Reps. John Barrow of Georgia and Patrick Murphy of Florida in asking that Medicare Advantage payment rates remain untouched next year.
They got their wish on Monday when Jonathan Blum, principal deputy administrator at the government’s Centers for Medicare and Medicaid Services, announced an average payment increase of about 0.4 percent next year. Actual payment rates will vary by plan based on location, a plan’s quality rating and other factors, Blum said.
Many Democrats expressed relief.
“This proposed cut would have been disproportionate, hurting seniors who would lose doctors or pay more,” Schumer said in a statement on Monday. “We’re glad the administration heeded our call and reversed the policy.”
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